Budget announcement RECAP: Jeremy Hunt's Spring Budget as it happened with pension, fuel duty, and energy bill changes
As part of a package aimed at helping with the cost of living, the Chancellor said the energy price guarantee, which caps average household bills at £2,500, will be extended at its current level from April to June.
It had been due to rise to £3,000 in April and the cost of scrapping the planned 20% increase will amount to about £3 billion.
Advertisement
Hide AdAdvertisement
Hide Ad
The fuel duty freeze and the 5p cut will be maintained for another year, saving the average driver around £100.
Jeremy Hunt confirmed nuclear power would be classed as “environmentally sustainable” to drive investment in the energy sector, and said he would launch “Great British Nuclear” to bring down costs
You can follow updates in our live blog.
Budget announcement RECAP: Jeremy Hunt announces Spring Budget with pension, fuel duty, and energy bill changes
Institute for Fiscal Studies (IFS) director Paul Johnson said the Chancellor is missing a “serious long term strategy” on pension tax policy.
“‘Listened to concerns of senior NHS clinicians’ says Mr Hunt,” he tweeted.
“Changing pension tax relief as a result. Should have changed NHS (and other public sector) pension schemes. Sledgehammer to crack a nut.
“There is a case for raising annual and lifetime allowances – reversing last 13 years of policy. But won’t have much effect on employment. And damaging and complex tapering system remains.
“Pension tax policy needs a serious long term strategy. Such a strategy completely missing.”
Sir Keir Starmer is not on his feet, saying that “this Budget changes nothing” after a 55 minute address from Jeremy Hunt.
He accused the Conservative Government of being “out of touch”.
Responding to Jeremy Hunt’s Budget in the Commons, he said: “So for all the hype, a Budget for growth that downgrades the growth forecast.
“His opening boast was that things aren’t quite as bad now as they were in October last year after the ‘kamikaze’ budget and the more that he pretends everything is fine, the more he shows just how out of touch they are.”
Institute for Fiscal Studies (IFS) director Paul Johnson said the Chancellor is missing a “serious long term strategy” on pension tax policy.
“‘Listened to concerns of senior NHS clinicians’ says Mr Hunt,” he tweeted.
“Changing pension tax relief as a result. Should have changed NHS (and other public sector) pension schemes. Sledgehammer to crack a nut.
“There is a case for raising annual and lifetime allowances – reversing last 13 years of policy. But won’t have much effect on employment. And damaging and complex tapering system remains.
“Pension tax policy needs a serious long term strategy. Such a strategy completely missing.”
Sir Keir Starmer says the Budget spell out the problems of the economy, with Britain facing a “year of stagnation and “non-existent” growth adding that the UK is the worst performing nation in the G7, adding that the country has spent “13 years stuck in a doom loop” under Tory governments.
“This is a failure you can measure not just in the figures but in the empty pockets of working people right across the country. 13 years without wage growth. 13 years no better off. 13 years stuck in a doom loop of lower growth, higher taxes and broken public services.”
He said the OBR had made clear “things don’t look any better in the long run”.
He added: “A broken labour market holding back our prospects, seven million on the NHS waiting lists, ill-health and disability on the rise. And the consequences, as we’ve just heard, deferred to the future.
“The classic short-term sticking plaster cycle. Decisions cynically ducked today. Pain for working people tomorrow. It doesn’t have to be like this.”
Chancellor of the Exchequer Jeremy Hunt has announced the UK Government’s Spring Budget in the House of Commons – but what does it mean foryou>
The Labour leader criticised plans to abolish the pensions allowance limit, labelling them as a “permanent tax cut” for the wealthy.
Sir Keir Starmer told the Commons: “We needed a fix for doctors, but the announcement today is a huge giveaway to some of the very wealthiest.
“The only permanent tax cut in the budget is for the richest 1%. How can that possibly be a priority for this Government?”
“The truth is our labour market is the cast iron example of an economy with weak foundations. Our crisis in participation simply hasn’t happened elsewhere, not to this extent, it is a feature of Tory Britain and global excuses simply won’t wash.”
Laying out his own plans for a “wider reform agenda”, he said: “Instead of making working people pay, we need to make work pay, move on from growth that is based on insecure, low-paid jobs to growth which comes from good work, from strong employment rights, that can deliver high productivity.”
In words which mimicked an election slogan of his predecessor, Sir Keir added: “Growth from the many for the many, that makes people better off in all parts of our country.”
The Office for Budget Responsibility said Jeremy Hunt had spent two-thirds of the improvement in the financial position as part of his Budget, meaning debt was falling “only by the narrowest of margins” in five years’ time.
“The economic and fiscal outlook has brightened somewhat since our previous forecast in November,” the OBR’s economic and fiscal outlook report said.
“The near-term economic downturn is set to be shorter and shallower; medium-term output to be higher; and the budget deficit and public debt to be lower.
“But this reverses only part of the costs of the energy crisis, which are being felt on top of larger costs from the pandemic.
“And persistent supply-side challenges continue to weigh on future growth prospects.”
The Chancellor should ignore those who are urging him to increase or to abandon the inflation target that he gives to the independent Bank of England, the Conservative chair of the Treasury Committee has said.
Harriett Baldwin told the Commons: “I want to start by saying how lucky we are to have a lucky Chancellor.
“He has been lucky this winter because the weather has been a lot warmer than when he stood here in November and as a result, the price of energy has come down. But he has also made some of his own luck, because thanks to the steps that he took, the financial markets have stabilised and he has had to pay less interest than he was expecting to about £4 billion.”
On inflation, she said: “Far from being transitory as the independent Bank of England hoped inflation has become quite deeply embedded in the UK economy, in wage inflation and in expectations.
“And that’s why I welcome the news today that the Office for Budget Responsibility is expecting that by the end of this year, inflation will be back down to 2.9% again, because inflation is the worst tax that we have on our economy.
She went on: “And so the Chancellor must not hear the siren voices, urging him to increase or to abandon the inflation target that he gives to the independent Bank of England. The top priority for our economy this year must be to at least halve inflation.”
Now for a deeper look at some of the major announcements from The Budget
Scotland will receive an additional £320 million as a result of the Budget, Jeremy Hunt has said, as he pledged to create a “potential Canary Wharf” north of the border.
He said the UK Government would deliver 12 new investment zones, which he labelled “12 potential Canary Wharfs”.
Full story HERE
SNP economy spokesperson Stewart Hosie warned “Brexit slammed the brake on UK investment”.
He told the Commons: “What the Chancellor actually described though was a UK economy which has gone from the most robust in the G7, to one of the weakest.
“A UK economy where Brexit slammed the brake on UK investment, a UK whose performance deteriorated after the Brexit referendum both in absolute and relative terms.
“A country which unilaterally imposed trade barriers with its nearest neighbours and a country, the only one in the G7 where the economy has not returned to its pre-pandemic level.”
The Conservative chairwoman of the Treasury Committee has said “we need to think long and hard” about why fuel duty is still in the forecast numbers.
Harriett Baldwin welcomed the Chancellor’s fuel duty freeze, but added: “I do think we need to think long and hard about why a tax that is inflationary, that harms growth, and is heading the way of the dodo as we all move to electric cars, is still in the forecast numbers.”
She went on: “The Chancellor has had some luck since November. He shared that luck with UK households today.
“He has a clear intention to bring down inflation, to grow the economy and to reduce debt. May good luck continue to follow him and may the extra billions of pounds that he’s scoring for the defence budget help our Ukrainian friends have good luck.”
Missed The Budget?
Here’s a look at some of the key points
- Jeremy Hunt announced the scrapping the lifetime allowance on tax-free pension contributions, which is currently £1.07m. The pensions annual tax-free allowance is being raised by 50 per cent from £40,000 to £60,000.
- Fuel duty has been frozen for another year and government support for energy bills, the energy price guarentee, extended for another three months. The fuel duty freeze and the 5p cut will be maintained for another year, saving the average driver around £100.
- Defence spending is being boosted by £11bn over the next five years and corporation tax will be increased from 19% to 25% as expected
- Nuclear power will be classed as “environmentally sustainable” which will give it access to the same investment incentives as renewable energy.
- Underlying debt is forecast to be 92.4% of gross domestic product (GDP) next year, 93.7% in 2024-25; 94.6% in 2025-26, and 94.8% in 2026-27, before falling to 94.6% in 2027-28.
- Some 12 new investment zones will be created, offering up to £80 million of support each for tax breaks and incentives.
- Small businesses investment allowance increased to £1m
“The sick man of Europe”
If you tuned in to the Budget you will have heard the phrase “Sick man of Europe”
Sir Keir Starmer said Britain is the “sick man of Europe once again” and the Budget shows the “expiry date looms ever closer” for the Conservatives.
The Labour leader said years of Tory-led governments have led to a “doom loop of lower growth, higher taxes and broken public services” and put the country on a “path of managed decline”.
He criticised Chancellor Jeremy Hunt for “dressing up stagnation as stability”, adding of the public: “They deserve better than another cheap trick from the Government of gimmicks, making them pay whilst trying to claim the credit.”
Rising to respond to Mr Hunt’s hour-long financial statement, Sir Keir mocked the Government over recent salad shortages in supermarkets and Environment Secretary Therese Coffey’s suggestion of a greater reliance on turnips to avoid such a situation.
He told the House of Commons: “His opening boast was that things aren’t quite as bad now as they were in October last year after the kamikaze budget, and the more that he pretends everything is fine, the more he shows just how out of touch they are.”
The Scotch whisky industry has been dealt a “historic blow” after Chancellor Jeremy Hunt announced one of the largest tax hikes in recent decades, the sector has warned.
Mr Hunt raised duty on Scotch whisky by 10.1 per cent, in a move the industry said broke the UK Government’s pledge to “review alcohol duty to ensure our tax system is supporting Scottish whisky”.
Critics said distillers were being “hung out to dry”.